EUROPEAN COMMISSION: BARROSO SAYS EU MUST MODERNISE TO PROTECT SOCIAL VALUES.

Mr Barroso told MEPs that the paper was a response to fears about globalisation and oEuro-pessimismo. It was a owake-up callo to member states, he said. oWe have to modernise our policies to preserve European valueso, he urged, saying that instead of being victims of globalisation, the EU could shape the process according to its key values. Current policies were failing to close the osocial justice deficito, he said, citing the 19 million unemployed in the EU. The ageing population was putting pressure on health, welfare and pension systems, he said. China and India were becoming ever more competitive and increasing their share of global trade. These new competitive pressures were creating fears but the right response was open markets, not a return to protectionism, according to the Commission President. Nevertheless, the EU was well placed to respond, he said, stressing that action at EU level was essential because single member states could not make it on their own.

The paper contrasts a Europe of "dynamism, innovation and openness" alongside a Europe of "19 million unemployed, child poverty and stagnant growth".

Given the challenges of globalisation, "the status quo is not an option", says the paper. "Unless we are able to change, the forces of global competition, the impact of new technologies and our ageing population will increase the gap between the two Europes, and Europe and the world", it states.

The Commission says that more coordination of taxation systems across the EU is essential and repeats its call for a "common, coordinated corporate tax base". It also calls for a shift in the burden of taxation away from labour to consumption or pollution taxes.

The paper says that the need for change is widely recognised in initiatives like the Lisbon Strategy on boosting competitiveness, growth and jobs. But this analysis had not been translated into action, the Commission argues. Five years on from the launch of the strategy in 2000, there is an added sense of urgency, it states. Global competition, especially from Asia, has intensified, while developing countries are increasing the numbers of high-tech graduates they are turning out and boosting their spending on research and development.

In conclusion, the paper stresses that the EU is well placed to rise to these challenges because "no single country" can face them alone.

Unity and diversity.

In terms of individual policy areas, the paper points up the "unity and diversity" of...